On September 27, 2006, federal agents surrounded the offices and warehouse of Houston’s American Grocers, Inc., an exporting business that shipped food to the Middle East and worked, in part, off lucrative military contracts. Located in a business park along the Beltway on the city’s northwest side, next to companies that built transmissions for diesel trucks and distributed linoleum flooring, American Grocers existed the same as the rest. Unnoticed and quiet, except for the delivery trucks growling to and from its loading bays.

The agents approaching the building that morning weren’t the typical raiders. They weren’t FBI, not bullish G Men or battle-tested SWAT officers by any means. Many of the men, from the Department of Defense‘s Criminal Investigative Service and the Food and Drug Administration, didn’t carry weapons, and those who did certainly hadn’t fired shots in the field. In terms of raids, this one was low key.

But when agents rushed through the doors, they found an operation that was nothing short of evil: workers, surrounded by vats of chemicals, hunched over pallets of expired food and using acetone and Dremel tools to erase expiration dates from packaging. The expired food was destined for American military troops serving in the Middle East, according to court documents. (There’s more to this story! And you’ve probably eaten this food if you have spend any time in Iraq or Afghanistan. Personally I hope this SOB rots in prison!)

This is a very well written in depth investigative report KUDO’s to the writer. To read this article in depth, which is well worth the time, click HERE

Texas businessman settles military food mislabeling case for $15 million

Prosecutors allege that Samir Mahmoud Itani and his company American Grocers Ltd. changed the “use-by” labels on food and sold it to the U.S. military from 2003 to 2006 during the Iraq war.

P.J. Huffstutter and Andrew Blankstein - Los Angeles Times – November 20, 2010 - A Texas businessman has agreed to pay $15 million to settle federal allegations that he and his company cheated the government by selling old and potentially dangerous food to the U.S. military to supply combat troops serving in Iraq and elsewhere. Prosecutors had alleged that Samir Mahmoud Itani and his company American Grocers Ltd. profited from the Middle East conflict by ripping off taxpayers and shortchanging U.S. soldiers in the mess hall. According to the government, Itani’s firm bought deeply discounted products whose freshness dates had expired or were nearing expiration. His workers then altered those dates and resold those supplies to the government for hefty markups, prosecutors alleged.

On Friday, Department of Justice officials announced that Itani, his wife, Suzanne, his brother Ziad and the company agreed to pay the penalty to settle the false-claim charges in this federal whistle-blower case.

Suzanne Itani, chief executive of American Grocers, said in a statement that the company denied any wrongdoing and that the settlement was a way to avoid lengthy litigation. She said that the company was “proud of the service and products it delivers to its customers” and that company officials “look forward to returning our full attention to serving our many loyal customers throughout the world.”

Samir Itani could not be reached for comment. According to property records, he owns a $2.2-million, 9,931-square-foot mansion with two elevators in an upscale Houston neighborhood.

Prosecutors said that Samir Itani, 51, and a tightknit group of family and business acquaintances sold at least $36 million worth of mislabeled food products to the government.

The shopping list was long and included potato flakes, salad dressing, produce, peanut butter, lobster and hamburger patties, according to the federal complaint. The supplies flowed out of Texas and to bases across the Middle East from about 2003 to 2006 during the Iraq war.

As the U.S. military presence grew in the Middle East, Itani’s business boomed. American Grocers shipped so much stale merchandise that the company bought paint solvent by the barrel and set up assembly lines to wipe out the old labels to make room for the phony dates, according to the complaint.

The Justice Department did not say whether any troops were sickened by the food supplied by American Grocers, or whether any of the food companies that sold items to Itani knew of any wrongdoing. (Click HERE for article)

Marine whistleblower Franz Gayl: Security clearance removal is retaliationR. Jeffrey Smith – Washington Post Staff Writer – November 20, 2010 – Franz Gayl made a name for himself a few years ago as a Marine Corps whistleblower, a civilian scientist who helped push the Pentagon to shift its Iraqi weapons strategy. Senators called him a hero for disclosures that helped get heavily armored vehicles known as MRAPs to the battlefield.

But a few weeks ago, Gayl found himself booted from a room where confidential materials are handled and stripped of his security clearance. His superiors accused him of “a disregard for regulations, a pattern of poor judgment and intentional misconduct” – behavior that they said “indicates you are unreliable and untrustworthy.”

War on Fraud in the Defense Industry
Thomas M. Gallagher – Tuesday, March 09, 2010

In March 2009 President Obama took aim at wasteful government spending, and defense contractor fraud was at the center of the bull’s eye. The President declared war on the “outright fraud” present in government contracts, causing losses in the billions of dollars. The President decried the “broken” contracting system and announced procurement reform and renewed enforcement efforts. The President stated:

We are spending money on things that we don’t need, and we are paying more than we need to pay. And that’s completely unacceptable. … In Iraq, too much money has been paid out for services that were never performed, buildings that were never completed, companies that skimmed off the top.

One year later, the President’s war on fraud in the defense industry has gained momentum and will not slow down any time soon.

The increased oversight of defense contracting fraud can be seen on multiple fronts, including increased budgets for the Department of Defense investigative agencies, significant congressional oversight, and aggressive investigations by the Department of Justice (DOJ) and several United States Attorney’s Offices.